Overview of Brazils macro environment

Bing one of the members of the “ Big Four – BRIC states ” , Brazil experienced the economic downswing and flop and has been hampered by inordinate liability and high rising prices in the yesteryear. Since 1990s, Brazil has implemented legion policies with authorities and governments ‘ support to establish the reform. Brazil ‘s economic systems started to growing quickly after policies and stabilisation program were implemented. Furthermore, the on-going sound marco-economic and societal policies have extended the period of stableness, growing and societal additions ( WorldBank, 2010 ) . Therefore, the uninterrupted development of its inside for hosting the World Cup and Olympic Games in 2014 and 2016 severally can prosecute industrial and agricultural growing. With the huge natural resources, labour pool and trading chances to other foreign states hence significantly increased in Brazil and more foreign investors were attracted. Nowadays, it has become a regional leader with taking economic power of South America that is one of the first in the country to get down an economic recovery ( InvestorPlace, 2010 ) .

Overview of Brazil ‘s macro-environment

In this subdivision, it is traveling to overview Brazil ‘s macro environment by using PEST analysis and the few facets are being discussed as follow.

Plague Analysis

Plague analysis is analysing the external environment which is analysing the factors of Marco-environment. It includes Political factors, Economic factors, Sociological factors and the Technological factors ( Jobber, D. , 2004 ) .

Political Factors

Refer to Figure 2.1, Brazil has the stable political clime which under the leading of the Communist party. The legal system of it is based on the Roman Codes ( CIA, 2010 ) . Brazil has 26 administrative divisions and the authorities is divided into executive subdivision, legislative subdivision and judicial subdivision ( CIA, 2010 ) . In add-on, it perceived the corruptness job as ranked 75th place out of 180 states of the transparence International ‘s 2009 Corruption Perceptions Index ( Transparency, 2010 ) .

In add-on, Brazil involved within the free trade understanding that is signed by the United States, Central America and Dominican Republic which benefited Brazil for trading chances ( BusyTrade, 2010 ) . Furthermore, it launched the Growth Acceleration Plan in 2007 to develop and calm the economic growing ( WorldBank, 2010 )

Bing one of the emerging economic systems in the universe, Brazil ‘s economic system is turning at a moderate but steady degree with uninterrupted turning GDP. Refer to Figure 2.2 which is figured out that the GDP of Brazil is changeless growing during 2000 to 2007 significantly.and maintained the sustainable growing to 2008.

From Figure 2.3, Brazil weathered the planetary fiscal downswing with comparatively minor impacts.A The state was one of the last to fallA into recession in 2008 and among the first to restart growing in 2009. With the big growing in agricultural, fabrication and excavation, it ranked highest among the South American states with the strong place in the planetary economic system ( Tradingeconomics, 2010 ) .

Brazil is the largest national economic system in Latin America, the universe ‘s ten percent largest

economic system at market exchange rates and the 9th largest in buying power para ( PPP ) , harmonizing to the International Monetary Fund and the World Bank. It has big and developed agricultural, excavation, fabrication and service sectors, every bit good as a big labour pool. Therefore, the expanding of its presence in international fiscal and trade goods markets can assist Brazil ‘s economic support on growing

Refer to Figure 2.4, the involvement rate in Brazil is kept on worsening as to pull more foreign direct investing. The authorities lowered down the involvement rate, in effect, to take down the rising prices rate.

From Figure 2.4, Brazil suffered serious rising prices rate in 2008. However, it declined during 2009. The latest rising prices rate is 4.6 % in July of 2010 which means the monetary values measured against the criterion buying power is still high.

Harmonizing to Figure 2.6, approximately currency convertibility, Brazil allows its currency to set in value in foreign exchange markets so long as the fluctuations in value.

From Table 2.7, the mid-year population is 201,103 1000s and ranked 5 out of 238 states ( CIA, 2010 ) . Brazil was one of the largest population states in the universe. The growing rate of 2010 is 1.2 which was lower than 1995 and 2005.

The nationality of Brazil was Brazilians ( CIA, 2010 ) and the faiths were chiefly Roman Catholic ( CIA, 2010 ) . The linguistic communications of Brazilians were Portuguese ( CIA, 2010 ) .

From Figure 2.8, Brazil does non endure from aging job. And the birth rate was maintained from 2009 that 18.43 % in Figure 2.9 ( UNICEF, 2010 ) . Together with longer life anticipation with the index of life anticipating at birth in 2008 is around 71.99 old ages old as maintained ( UNICEF, 2009 ) .

The labour force is 101.7 million in 2009 that ranked 6th out of 228 states ( CIA, 2010 ) . The unemployment rate is kept on dropping in these 2 old ages as refer to Figure 2.10.

The function of female and male are vary by societal categories ( EveryCulture, 2010 ) . Most of the Brazilian adult females had occupations outside place and employed in low-skill or low paying occupations ( EveryCulture, 2010 ) . It meant that there was no gender equality in that society.

Beginning: Tradingeconomics, 2010

Despite the poorness ratio is diminishing as refer to Figure 2.11, Brazil ‘s inequality degrees remains among the highest in the universe. Many people still live in poorness with societal exclusion is quantitatively and qualitatively marked and structurally ingrained ( WorldBank, 2010 ) .

Technology Factors

Brazil is a leader in scientific discipline and engineering in South America and in some Fieldss as a planetary leader. About the technological research is mostly carried out in Brazil which is chiefly supported by authorities. Furthermore, the Brazilian information engineering market is the largest in Latin America and the disbursement on IT merchandise and services is expected to increase positively. Together with the using economic system raising 1000000s into in-between category for whom computing machines are no longer beyond range. Brazil ‘s IT services market is expected to go on to turn strongly in 2010, with entire disbursement of around US $ 9.4bn as the economic system continues to resile back from recession. For a developing market, the per centum of Brazil IT market grosss generated by services is high at around 38 % , which corresponds more to developed market degrees.

Brazil authorities supported the engineering development by supplying the support as it was the leader of scientific discipline and engineering development in South America. Refer to Figure 2.12, Brazil ‘s research and development is acute on invention of engineering substructure.

Ideological Factors

Brazilians had the strong national political orientation that they called their land as the “ racial democracy ” ( EveryCulture, 2010 ) . They were rarely justice on the black and white people but classified racially depend on the societal categories ( EveryCulture, 2010 ) . As a consequence, it meant that Brazilians were holding heavy constructs on the societal categories.

Brazil ‘s Trade, Investment and Migration Pattern

Brazil is in Group 4 which is the about new industrialized economic systems with the mean growing rate in base on balls decennaries ( Thompson, G. , 1998 ) . Agricultural was playing an of import function in Brazil. However, Brazil is turning from agricultural to industrialisation. Agricultural should be a critical function to Brazil ( Balassa, B. , 1998 ) . As a consequence, in order to develop the economic sciences, Brazil needed to import the industrialisation subordinates such as machinery and equipment.

By the trade theory, the comparative advantage of the state is determined by “ factor gifts ” ( Thompson, G. , 1998 ) . “ During the procedure of industrialisation, the construction of comparative advantage displacements from simple, labour-intensive merchandise to sophisticated capital and technology-intensive merchandise ” ( Thompson, G. , 1998 ) . As a consequence, Brazil as the “ latecomer industrialisation ” ( Thompson, G. , 1998 ) begins to import the merchandises from the advanced states such as United States.

The followers are the indexs of imports and exports by values.

From Figure 3.1, Brazil ‘s value of exports and imports is sustainable growing during 2007 to 2008. As the brought down by weaker economic activity and lower planetary trade good monetary values drive the entire exports fell by 22.7 % ( in US dollar footings ) and imports by 26 % as economic recession ( CIA, 2010 ) .

Furthermore, Brazil ‘s export major trade goods are transport equipment, Fe ore, soya beans, footwear, java, car is ranked 26th when comparison to the universal. And import major trade goods are machinery, electrical and transport equipment, chemical merchandises, oil, automotive parts, and electronics ( CIA, 2010 ) .

Investing form

In Latin America, Brazil is the largest receiver of foreign direct investing ( FDI ) as Brazil is unfastened to and encourages foreign investing. Merely generate the domestic nest eggs is non sufficient for sustainable long-run growing in Brazil ( Investorplace, 2010 ) , therefore must go on to pull FDI. Together with the statute law advancing public-private partnerships and substructure development plan known as the Growth Acceleration Program can hike Brazil ‘s economic.

From Figure 3.2, the foreign direct investing clime was non stable during 2002 to 2009. There are undulated alterations during 2007 to 2009 because of low labor cost and rich natural resources, therefore, many foreign direct investings were attracted to put in Brazil. For many foreign direct investors, the most attraction point was the turning local market and policies that encourage the foreign investing ( Hubpages, 2010 ) . The largest individual beginning of the foreign investing in Brazil was the United States, so Germany, Japan as follow ( Hubpages, 2010 ) . Furthermore, the biggest foreign direct investing activities were invested in fabrication ( Hubpages, 2010 ) . In 2014 and 2016, it is traveling to keep World Cup and Olympics promote the investing through touristry sector ( InvestBrazil, 2010 ) .

Migration form

As economic growing, Brazilian started to travel to urban to hold a better life environment. There were two factors driven the motion, push and pull factors ( Thompson, G. , 1998 ) . Push factor was Brazilian to avoid poorness and hapless populating criterion. Pull factor was Brazilian to better the life environment. As a consequence, there is now 88 % of population is classified as urban ( CIA, 2010 ) . Merely a few per centum were still populating near the seashore. The net migration rate was -0.09 migrants/1,000 population ( CIA, 2010 ) .

Relationship between Brazil and the international environment

Political Factors

In 1990, Brazil ‘s authorities has radically changed the model conditions for industrial development accompanied by engineering and industrial policy plans. Furthermore, Brazil is bit by bit opening the market to foreign rivals that remarked few ordinances on trade and investing from foreign states, therefore making an environment that requires international fight and thereby forces companies to achieve international degrees of quality and efficiency ( BrazilGov, 2010 ) .

There are a figure of deductions that Brazil is implementing to command the Foreign exchange rate of currency with the policies and action plans. Furthermore, the presence of legal and regulative trading protection for foreign investor making concern in Brazil. As refer to Figure 4.1, Brazil was ranked 73th out of the 183 best pattern economic systems states ( IFC, 2010 ) . Together with foreign direct investing and authorities support that has mobilized a significantly big sum of capital to upgrade the substructure of inside ( FloridaBrazil, 2010 ) .

Economic Factors

Despite the economic crisis, Brazil ‘s GDP showed continued growing through 2007-2008 while other regional states ‘ GDP declined ( Worldbank, 2010 ) . In add-on, the steady growing with strong consumer disbursement and occupation creative activity that stableness of populating organizing a healthy economic system, therefore, Brazil surely attract the foreign investors to catch up the concern chance ( Obelisk, 2010 ) .

Brazil with big turning in agricultural, fabrication and excavation, therefore, Brazil is acute on executing its potency to being emerging market. As a consequence, Brazil ranks among the tenth richest states of the universe by GDP and has maintained the lowest external debt when compared to other regional states ( SloanCenter, 2010 ) .

Sociological Factors

Brazil is one of the states that has the largest population of the universe with around 102 million labour force that ranked as 6th when comparing to the universe as shown in Figure ( CIA, 2010 ) .

Ideological Factors

Brazilians had strong sense of national political orientation that proud of their state ‘s natural resources and diverse civilization ( EveryCulture, 2010 ) . Besides, Brazilians are welcome the aliens to go and put in such robust emerging market ( FloridaBrazil, 2010 ) .

Foreign Relationss

Brazil is a community leader in Linter American with corporate security attempts in economic cooperation of Western Hemisphere ( BrazilGov, 2010 ) . Furthermore, as a member of Organization of American States and Inter American Treaty of Reciprocal Assistance that can calculate out that Brazil has possible to spread out dealingss with its neighbours ( BrazilGov, 2010 ) .

In add-on, Brazil is a founding member of the Latin American Integration Association and Union of South American Nations that has been a leader of G-20 group of states ( BrazilGov, 2010 ) . In 2009, Brazil non merely became a creditor state that merchandising with United States, Western Europe, and Japan, but besides China is a turning market for Brazilian exports.

Features and Challenges of macro-environmental factors towards the trade, investing and migration forms of emerging markets

Main drivers for making concern in Brazil

Brazil is the fifth largest economic system with population of 198 million.

Many local companies are undervalued and in demand of restructuring, capital and engineering

Growth possible and consumer market

Broad industrial base and substructure, and a diversified economic system

Creativity and flexibleness of labour force, coupled with its competitory cost footing

Abundant agricultural, mineral and energy resources and possible

Established transit webs ( railroads, main roads, ports ) and distribution channels in most industrialised countries

Denationalization in late phases and follow-on minutess still in development

Inflation under control in the last 10 old ages

Increasing globalisation and international trade, with Government policies prefering exports

Foreign investors are eligible for most available financial inducements

Goodwill by and large revenue enhancement deductible

New ordinances prefering minority stockholders

Improvement in local capital and debt markets

Main Challenges of making Deals in Brazil

Complex revenue enhancement and employee related regulative environment, with high revenue enhancements and societal charges on paysheet, gross revenues and income

Multiple revenue enhancements with fast altering statute law impacting concern programs and increasing hazards of eventualities

Economic environment still considered volatile as compared to more stable economic systems

Fast-changing concern conditions

Lack of local funding coupled with high existent involvement rates

Quality of historical fiscal information affected by fluctuations in exchange rates and Generally Accepted Accounting Principles differences

Complex transportation pricing and foreign capital enrollment regulations

Troubles in reorganising companies rapidly, including high costs for employee expirations

Important cultural distinctive features, including a different perceptual experience of the due diligence procedure

Sometimes the A?know-whoA? is more of import than the know-how in the local market

Considerable bureaucratic regulations and ordinances for certain concerns and industries

High demand for investings in the distribution channels and substructure

Semi-skilled and unskilled labour in certain developing countries

Social extremes with unequal distribution of wealth – a important part of the

Population non take parting in the consumer market

Justification of choice of Brazil

There are many grounds of taking Vietnam and traveling to place its economic hereafter as emerging market.

First, Brazil has strong committedness that has made important advancement in developing a sustainable investing market over the last decennary and justly deserves its repute as the leader among emerging economic systems in this respect. These accomplishments can proofed that foreign investors are tend to making concern in Brazil as refer to Figure 6.1, 6.2.

Second, the development of a sustainable investing market by Brazil has led other emerging markets to concentrate on the same issues and ends.

Third, Brazil has strong concern instance that importance of sustainability in concern and investing in Brazil that provide stable political clime and facilitated regulations and ordinances that maintained the economic system steady growing.

Finally, Brazil demonstrated impressive bravery, finding, flexibleness, and creativeness in sustainable hereafter. Together with Brazil ‘s stable economic and political environment that broad investing and authorities ‘s committedness to economic reform can direct Brazil being success.

In order come ining into Brazil, 4P is playing an of import function to steer the investors as refer to Figure 7.1.


“ Merchandise is a cardinal component in the overall selling offering. ” ( Armstrong, G. & A ; Kotler, P. , 2007 ) .

From Figure 7.2, there are three degrees of merchandises which are core benefits, existent merchandise and augmented merchandise. In order to measure the merchandise component in Brazil, it is of import to understand their life style, wont and their ingestion behavior.

Presents, Brazilian demand more IT merchandises such as nomadic phone, computing machines and package. Furthermore, as Brazilian are going more affluent, the demand of lodging and transit are increasing ( Laposte, 2010 ) .

Most Brazilian including the low-income population is loyal to trade names. Those people with the upper-middle categories are pay attending on the quality and the value-added services such as the guarantee or after-sales services. They will non reject the foreign goods although they have the national pride ( Laposte, 2010 ) .

As a consequence, based on the three degrees of merchandise, in order to plan the merchandise to come in into Brazil, it is recommended that import the convenience, shopping and forte merchandises to fulfill both low and high income group. For the low income group, the nucleus benefit of the merchandise should be high quality trade goods with low monetary value such as toothpaste. For the high income group, the nucleus benefit of the merchandise should be strong trade name penchant such as luxury goods.

Monetary value

“ Monetary value is the sum of money charged for a merchandise or services ” ( Armstrong, G. & A ; Kotler, P. , 2007 ) . As there is a broad spread of rich and hapless in Brazil, the monetary value puting should based on the mark section which is the metameric pricing. Segment pricing is selling merchandises or services at two or more monetary values which difference in monetary value non differences in costs ( Armstrong, G. & A ; Kotler, P. , 2007 ) . If the mark section is the low-middle category, the monetary value scene should be lower. If the mark section is the high-middle category, the monetary value can be higher as they are less price-sensitive.

Topographic point ( Distribution Channel )

“ Selling channel is a set of independent organisation that help do the merchandise or service available for usage or ingestion by the consumer or concern user ( Armstrong, G. & A ; Kotler, P. , 2007 ) . When enter into Brazil, manufacturers can non sell the goods straight to the concluding users. As a consequence, the mediators are playing the of import function to convey the merchandises to the markets. In Brazil, supermarket is going more of import for the distribution channel as it made 80 % of gross revenues ( Laposte, 2010 ) . There are several big local jobbers and retail merchants in Brazil. When come ining into Brazil, it can take the major jobber as the mediators to assist conveying the foreign merchandises to Brazilian.


“ Promotion mix is the specific mix of advertisement, personal merchandising, gross revenues publicity, public dealingss and direct selling that a company uses to persuasively pass on client value and construct client relationships. ” ( Armstrong, G. & A ; Kotler, P. , 2007 ) . In order to do the effectual publicity in Brazil, it is traveling to discourse on the media environment in Brazil.

Television has the lowest mean Ad Index in the universe ( Anonymous, 2006 ) . However, it was the most effectual publicity tools to Brazilian. Mention to Postpone 7.1, Television ‘s incursion is 97.4 % which was dominant. Brazilian watched telecasting over five hours per twenty-four hours. As a consequence, the publicity should chiefly concentrate on telecasting which has a high coverage.

Furthermore, there is another new chance to advance in Brazil which is direct e-marketing such as teleselling, e-mail etc. These can be used as the promotional tactics but non to keep the relationship between the clients and companies ( Laposte, 2010 ) .

The most effectual manner of the publicity scheme should be the pull scheme which spends a batch on advertisement to make clients ‘ demand on merchandises ( Armstrong, G. & A ; Kotler, P. , 2007 ) . In add-on, the promotional message on advertisement should be reflecting Brazil ‘s civilization such as Brazilian is enthusiasm.


Brazil has steadily improved macroeconomic stableness, constructing up foreign militias, cut downing its debt profile by switching its debt load toward existent denominated and domestically held instruments, adhering to an rising prices mark, and perpetrating to financial duty. Brazil ‘s possible can be maintained and sustained in hereafter of development.